Investment performance is one of the least important factors influencing the success of women in the alternative investment space which includes hedge funds, private equity funds, venture capital funds and funds of funds. A new study finds that the more important factors are networking capabilities and relationship-building skills, as well as a willingness to accept risk.
According to a survey from accounting and professional firm Rothstein Kass and the women’s networking group, 85 Broads, over half of those polled (51.9 percent) said having a strong professional network was the most critical factor impacting personal success.
Of 189 executive-level women who responded to the survey, more than 40 percent work for private equity firms or private equity funds of funds, over 32 percent work for hedge funds or hedge fund of funds and more than 19 percent are in venture capital, Rothstein Kass partner Rosalie Mandel told eFinancialCareers.
As for what other factors have been most critical to a woman's success, coming in second after a strong network was having strong mentoring relationships (49.7 percent), followed by:
- Willingness to take risks (48.7 percent)
- Strategic career planning (45 percent)
- Strong personal support networks (43.9 percent)
- Stellar investment performance (20.1 percent) and
- Access to capital (16.4 percent)
Asked whether being a woman makes it difficult to succeed in the business, over 47 percent of respondents said that they’d have to agree with that statement, and more than 16 percent said they strongly agree. (At the same time, however, 31.8 percent said they either disagree or strongly disagree with that assessment.)
The preponderance of firms represented in the survey have a very small percentage of women on their investment committee, with the largest number of respondents—26.5 percent—reporting they have a 10 percent or lower representation by females on such committees, 21.7 percent saying they have an 11 to 25 percent representation and 25.9 percent saying they have no representation whatsoever.
“These are not particularly high percentages, and still these percentages are better than women’s representation in the industry as a whole,” according to Cindy Padnos, founding managing director of VC firm Illuminate Ventures in Oakland, Calif.
“For example, in the high-tech sector, roughly two-thirds of venture capital firms have no women partners,” Padnos says in the survey report.
In fact, “Our research suggests erosion of some of the traditional stereotypes that have hindered the advancement of women in the alternative investment sector,” says Rothstein Kass’ Mandel.
In some cases, for instance, women are making strides as general partners with their firms. Though almost 30 percent of respondents said there are no women acting as general partners where they work, 11.6 percent said the ratio of female to male GPs was more than 50 percent (with some of the firms also predominantly women-owned) and almost 16 percent said that the percentage of female GPs where they work is between 26 and 50 percent.
Particularly encouraging, the New York Times Dealbook reports, is that “While most of the [female executives] in the survey said the coming 18 months would be challenging, nearly 65 percent said they expected to find attractive investment opportunities over that time period.
And only a third of the survey respondents said women’s capital raising efforts are hindered by the stereotype that they were more committed to their family or personal life than their career.
This is despite the fact that generally speaking it’s been a tough year for the business, hedge funds, private equity firms and venture capital funds alike.
“Today, work/life integration concerns have diminished to the point where most women in the sector are now more squarely focused on operational and capital raising challenges,” says Mandel.